Key insights
- The Federal Reserve reported a narrowing loss of $19.6 billion for 2025, an improvement from larger losses in 2023 and 2024. These losses stem from the Fed's expanded balance sheet during the pandemic. While narrowing losses are a positive sign, they still indicate ongoing costs associated with the Fed's past stimulus measures, potentially limiting future policy flexibility and exerting downward pressure on equity valuations.
NEW YORK, March 25 (Reuters) - The Federal Reserve reported a narrower loss last year in an audited financial statement released on Wednesday.
The Fed said that its total comprehensive loss for the full year of 2025 stood at $19.6 billion, versus $77.5 billion in red ink for 2024 and a $114.6 billion loss in 2023. The Fed last turned a profit in 2022 and returned $76 billion to the government that year, down from $109 billion in 2021.
The Fed’s losses are tied to the size of its balance sheet, which swelled massively during the COVID-19 pandemic as the Fed bought Treasury and mortgage bonds aggressively to both stabilize troubled financial markets and to provide economic stimulus when its interest rate target was at near zero levels and could be trimmed no further.